Tottering CIT

The game changed, and they apparently didn't:

July 14 (Bloomberg) -- CIT Group Inc. Chief Executive Officer Jeffrey Peek moved from a New Jersey office complex to a 28-story glass tower on Manhattan’s 42nd Street featuring a lobby bathed in blue, green and red. Three years later, he’s fighting to keep the lights on at the century-old finance firm.

Peek, 62, who joined CIT in 2003 after failing to land the top job at Merrill Lynch & Co., pushed the lender into subprime mortgages and student loans to pump up growth. Now, as investors flee the 101-year-old company’s bonds and shares on concern it may become the year’s biggest financial industry failure, Peek is trying to gain additional government support after receiving more than $2 billion last year.

“You could make a cogent argument that senior management didn’t have a good grasp of the financial storm that was on the horizon,” said Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania. “CIT has been through a number of near-death experiences. This time they cut it too close.”

...On Peek’s watch, the shares soared to a record $61.59 in February 2007 before plunging 98 percent as the company reported eight straight money-losing quarters. CIT’s debt rating was cut by Standard & Poor’s yesterday to seven levels below investment grade, as the ratings firm cited company requests to draw down on credit lines.

Moody’s also slashed its rating yesterday, to B3 from Ba2, or six levels below investment grade, because of “inadequate progress” toward improving liquidity. CIT, which lends to 950,000 businesses, warned that a collapse would put manufacturing and retail clients at risk.

CIT shares climbed to $1.66 in early trading at 8:10 a.m. in New York after closing at $1.35 yesterday.